Barclays downgraded shares of SolarEdge Technologies (NASDAQ:SEDG) to Underweight from Equal Weight in a note Wednesday, sending its share price more than 4% lower. The bank also cut its price target for the stock to $50 from $74 per share.
Analysts told investors that it is "too early for residential solar" and they believe consensus estimates will need to be revised down.
Also noting ENPH in the note, analysts said that while they think consensus estimates will need to come down for both companies, "the magnitude is larger for SEDG" based on their updated numbers.
"We calculate that SEDG is trading at a 3-turn premium to ENPH based on 2025E EPS and roughly two turns on 2025E EV/EBITDA," analysts wrote. "Due to the better recovery we expect for ENPH and also the higher gross margins, we think these valuations should be flipped with ENPH trading at a premium."
"We think the road to recovery will be tougher for SEDG from the perspectives of top line, gross margins, and market share," analysts added.